Rents and affordability

Date 1 September 2017
Date updated 1 February 2018

Rents and affordability

What does this chart show?

This shows how private rents vary by borough and how this compares with earnings. The bars show monthly rent levels* for a two-bedroom property and the line shows this as a percentage of gross full-time earnings in the borough. As this report is concerned with those at the bottom of the income distribution we look at the lower quartile (bottom 25%) for both earnings and rents. This is why the average rent is lower than the figure given in the Average rents indicator.

In 2015–16 in Inner London, the rent was £1,500 a month, while in Outer London it was £1,180. In England as a whole it was less than half as much as Outer London, and a third of the Inner London level, at £500 per month.

The highest monthly rent was £2,400 in Kensington & Chelsea. Westminster is the only other borough with monthly rents above £2,000, at £2,100. The lowest rent in London is £860 in Havering. Only two other Outer London boroughs also have monthly rents below £1,000 – Bexley and Barking & Dagenham.

In addition to having the highest rents, the rent in Kensington & Chelsea is 107% of the earnings for full-time workers. In other words, a single full-time worker in the bottom quarter of the earnings distribution is unlikely to be able to afford a two-bedroom property alone, as they would have to spend more on rent than they earn. Although this measure is slightly unfeasible, in that most full-time workers are unlikely to be renting a two-bedroom flat by themselves (though a lone parent would), it is indicative of broader trends in affordability.

The biggest deterioration in the earnings ratio since the last report occurred in boroughs that have had large increases in rents. Newham had the worst deterioration (from 63% of earnings in 2014/15 to 72% of earnings in 2015/16), and had the largest increase in rents over the same time period (£200 per month - a 17% rise). Tower Hamlets, Redbridge and Hounslow had the second, third and fourth largest deteriorations and also saw rent increases of 10%, 11% and 14% respectively. Barking & Dagenham is the only other borough where rents increased by more than 10% during the time period. The earnings ratio in Barking & Dagenham was seemingly not as affected as the other boroughs (from 48% of earnings in 2014/15 to 52% in 2015/16) because Barking & Dagenham rents were the cheapest of any London borough in 2014/15, meaning even with the large increase in rent (£121 a month), the borough still had the third lowest rent of any borough (£950 a month).

Only one borough, Havering, has rents below 50% of earnings. This is down from five boroughs in 2014/15. In Outer London, rents are 66% of earnings, up from 57% in 2014/15. In Inner London, rents are 78% of earnings, up from 70% in 2014/15. Across England, the bottom rents are 32% of the of earnings, not significantly changed from 2014/15 when it was 31%.

* These are based on a sample from the lettings administrative information database. This data is based on active tenancies, rather than advertised lettings.